Credit Cards
Return to Outline
 
 
Credit-card companies will be on campus trying to get you to accept one of their cards. They will offer you free deals just to sign up for a card — ask yourself why they're so eager to lend you money. Remember as well that you are a legal adult and if you sign on, you alone are fully responsible.

If you take a credit card, bear in mind the obvious: don't buy more than you can afford and keep good records so you are not overcharged. If you buy something with your new credit card, you must pay a certain amount by a certain date each month.

Also, be aware of a few things which are not so obvious:

  • If you miss a monthly payment, there will be a fee, usually $29-$35.
  • If you miss two payments in a six-month period, the low introductory interest rate which you were offered will skyrocket, sometimes to more than 20%.
  • Even if you make all the required payments, your introductory rate is likely to be temporary and will automatically rise at some point, often after several months. The new rate will probably exceed 10% a year and might approach 20%.
  • Even if your rate is fixed, the credit-card company might send you a detailed document which mentions a new, higher rate — it will be your responsibility to write them and tell them you don't want the new deal. If you don't, the interest rate you pay will rise even though you thought your rate was fixed for the life of the loans.
  • Sometimes, in the month when your rate rises, the new, higher rate will be applied retroactively — some or most of the previous month's balance will be charged the more expensive rate.
  • You might be charged an annual fee just for having the credit card and you might even be charged a fee if you pay off what you owe and close the account!
With a credit card, you have access to instant money, with no one looking over your shoulder or lecturing you about responsibility — what could be easier? The tough part is in paying the bills, along with the fees and interest charges. And even after those monthly payments are made, you are still on the hook to eventually pay off the full balance of what you owe.

Suggestion: Go to Charge & Debit Cards